NZ dollar little changed for week as Fed, RBNZ meetings loom
NZ dollar little changed this week as Fed, RBNZ meetings loom
By Paul McBeth
Jan. 24 (BusinessDesk) - The New Zealand dollar is heading for a 0.3 percent gain this week as traders prepare for policy meetings by the local Reserve Bank and US Federal Reserve next week to dictate the direction for the local currency.
The kiwi was trading at 82.83 US cents at 5pm in Wellington from 82.57 cents at the close of trading last Friday, and was little changed from 82.88 cents at 8am and 82.84 cents yesterday. The trade-weighted index fell to 78.43 from 78.61 yesterday, and is heading for a 0.4 percent weekly decline from 78.74 last Friday.
A BusinessDesk survey of six traders and strategists on Monday predicted the local currency would trade between 81.20 US cents and 84.20 cents this week. Four predicted the kiwi would fall this week, while one expected it to gain and one saw it largely unchanged.
Investors are waiting on the New Zealand and US central bank meetings next week to firm up their bets on the kiwi. Traders are split on whether the New Zealand’s Reserve Bank will hike interest rates at the January meeting after faster than expected inflation figures in December, while a Wall Street Journal report this week speculated the Fed will further trim another US$10 billion its US$75 billion monthly asset purchase programme.
“Whether the Fed steps up tapering or whether the RBNZ hikes or stays on hold are by no means certain,” said Chris Tennent-Brown, economist at ASB Bank in Auckland. The kiwi has been trading between 82 US cents and 84.50 cents in past month, and “there’s nothing to get it out of the recent range between now and then,” he said.
The local currency came under pressure yesterday after weaker than expected Chinese manufacturing data kicked off fears about the strength of the global economic recovery, and as concerns about emerging markets were fanned by Argentina devaluing its peso and Turkey’s central bank intervening in foreign exchange markets.
The kiwi gained to 94.49 Australian cents at 5pm in Wellington from 94.03 cents yesterday, and fell to 85.66 yen from 86.37. It dropped to 60.55 euro cents from 61.06 cents yesterday, and declined to 49.79 British pence from 49.93 pence.